The correct option is
C we create our own mental labels of objects
Option C is the right answer because it is clearly mentioned in the passage that - 'When we perceive an object, we automatically tend to label it (like nice, bad, wet, dry, light, dark, etc).
And our mind reacts on the basis of our own mental labeling of an object.
No wonder we tend to react to situations in a subjective manner.'
There is no evidence in the passage to suggest that Options A, B, and D are the right answers.
Hence, these are incorrect.